US Dollar softer after Le Pen wins first round with a caveat

LONDON (July 1) The US Dollar (USD) sees the Euro outpacing everyone on Monday after the first round of the French government elections took place. A clear victory for Marine Le Pen and her far-right party Rassemblement National (RN), though a stalemate could be at hand. None of the three major parties – Marine Le Pen’s far-right Rassemblement National,  Emmanuel Macron’s centric Ensemble Citoyens, and Jean-Luc Mélenchon’s far-left Nouveau Front Populaire – have reached their projected results as of the latest polls. Both the far left and the far right parties have reached less positive results, as the latest polls on Friday suggested, while Macron’s party was able to salvage the situation a bit, though still coming in third, which means no one holds a majority and a stalemate could be at hand. 

On the US economic calendar front, US traders will have little time to digest the French election news, with already some nice data points ahead on Monday as the Institute for Supply Management is gearing up for its June numbers on Manufacturing. Additionally, the European Central Bank (ECB) is holding its European Jackson Hole version, with its annual symposium in Sintra, Portugal, with many comments and interviews expected from several central bank members from across the globe. 

Daily digest market movers: US off to an early start

• The annual three-day European Central Bank Symposium starts in Sintra, Portugal, and lasts until Wednesday. ECB president Christine Lagarde will deliver a speech and opening remarks. More headlines are expected throughout these three days, with several central bank members and policymakers to be interviewed and making comments. 
• At 13:45 GMT, S&P Global will release June’s Purchasing Managers Index (PMI) for the Manufacturing sector’s final reading. The previous reading was 51.7, and no changes are expected. 
• At 14:00 GMT, the Institute for Supply Management will release June’s PMI Index:
  • Manufacturing PMI is seen heading to 49 from 48.7.
  • The New Orders Index was at 45.4 in May, with no forecast available for June. 
  • The Employment Index was previously at 51.1, with no consensus view available.
  • The Prices Paid Index is seen declining to 55.9 from 57.
• Equities are roaring and rallying higher with this French election gridlock result going into next week’s voting. Certainly, in Europe, all indices are popping higher by over 1%, while US equity futures are enjoying the positive spillover effect. 
• The CME Fedwatch Tool is broadly backing a rate cut in September despite recent comments from Federal Reserve (Fed) officials. The odds now stand at 57.8% for a 25-basis-point cut. A rate pause stands at a 35.7% chance, while a 50-basis-point rate cut has a slim 6.5% possibility. 
• The US 10-year benchmark rate trades near 4.39% and slid lower from its opening at 4.42% on the back of the French election news.

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